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The Pricing of Experience Goods: The Example of en primeur Wine

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  • Héla Hadj Ali
  • Céline Nauges

Abstract

The market for “primeur” wine in the Bordeaux region allows producers to sell wine that is still in barrels. As with all experience goods, producers send quality signals to uninformed buyers. Using original data on Bordeaux wines, we show that the pricing behavior of producers depends to a large extent on their reputation, and much less on short-term changes in quality (as measured by experts' grades). We also find that the primeur price has an informative role, since a 10% increase in primeur price leads to a 3% increase in prices on the market for bottled wine. Copyright 2007, Oxford University Press.

Suggested Citation

  • Héla Hadj Ali & Céline Nauges, 2007. "The Pricing of Experience Goods: The Example of en primeur Wine," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 91-103.
  • Handle: RePEc:oup:ajagec:v:89:y:2007:i:1:p:91-103
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.00965.x
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    Citations

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    Cited by:

    1. Caracciolo, Francesco & D’Amico, Mario & Di Vita, Giuseppe & Pomarici, Eugenio & Dal Bianco, Andrea & Cembalo, Luigi, 2016. "Private vs. Collective Wine Reputation," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 0(Issue 3), pages 1-20, August.
    2. Saens, Rodrigo & Berríos, Rodrigo, 2012. "The country brand trap," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    3. Dubois, Pierre & Nauges, Céline, 2010. "Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 205-212, May.
    4. Stefano Castriota, 2018. "Does Excellence Pay Off? Evidence from the Wine Market," BEMPS - Bozen Economics & Management Paper Series BEMPS49, Faculty of Economics and Management at the Free University of Bozen.
    5. Ali, Héla Hadj & Lecocq, Sébastien & Visser, Michael, 2010. "The Impact of Gurus: Parker Grades and en primeur Wine Prices," Journal of Wine Economics, Cambridge University Press, vol. 5(01), pages 22-39, March.
    6. Chauvin, Pierre-Marie, 2013. "The social fabric of prices: Institutional factors and reputation work in the bordeaux wine futures campaign," economic sociology_the european electronic newsletter, Max Planck Institute for the Study of Societies, vol. 15(1), pages 12-21.
    7. repec:spr:agfoec:v:3:y:2015:i:1:p:1-25 is not listed on IDEAS
    8. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, Fall.
    9. Edward Oczkowski, 2016. "Analysing Firm-level Price Effects for Differentiated Products: The Case of Australian Wine Producers," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 43-62, March.
    10. Mastrobuoni, Giovanni & Peracchi, Franco & Tetenov, Aleksey, 2014. "Price as a Signal of Product Quality: Some Experimental Evidence," Journal of Wine Economics, Cambridge University Press, vol. 9(02), pages 135-152, August.
    11. repec:spr:joptap:v:143:y:2009:i:3:d:10.1007_s10957-009-9575-7 is not listed on IDEAS
    12. Dimson, Elroy & Rousseau, Peter L. & Spaenjers, Christophe, 2015. "The price of wine," Journal of Financial Economics, Elsevier, vol. 118(2), pages 431-449.
    13. Kourtis, Apostolos & Markellos, Raphael N. & Psychoyios, Dimitris, 2012. "Wine price risk management: International diversification and derivative instruments," International Review of Financial Analysis, Elsevier, vol. 22(C), pages 30-37.
    14. Ramo Barrena & Mercedes Sánchez, 2011. "Abstraction and product categories as explanatory variables for food consumption," Post-Print hal-00712382, HAL.
    15. Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.
    16. Richard Carew & Wojciech J. Florkowski, 2010. "The Importance of Geographic Wine Appellations: Hedonic Pricing of Burgundy Wines in the British Columbia Wine Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(1), pages 93-108, March.
    17. Rutherford, William & McGimpsey, William & Narayan, Prakash, 2013. "Evaluation of New Zealand’s regulatory framework to support the reputation of horticultural commodity exports," 2013 Conference, August 28-30, 2013, Christchurch, New Zealand 187038, New Zealand Agricultural and Resource Economics Society.
    18. Deselnicu, Oana C. & Costanigro, Marco & Souza-Monteiro, Diogo M. & McFadden, Dawn Thilmany, 2013. "A Meta-Analysis of Geographical Indication Food Valuation Studies: What Drives the Premium for Origin-Based Labels?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 2), pages 1-16, August.
    19. Paroissien, Emmanuel, 2016. "Solving for a Bias in the Standardized Expert Wine Score," Working Papers 231132, American Association of Wine Economists.
    20. Teuber, Ramona, 2008. "Geographical Indications and the Value of Reputation - Empirical Evidence for Cafe de Marcala," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43835, European Association of Agricultural Economists.
    21. Kelly Grogan, 2015. "The value of added sulfur dioxide in French organic wine," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-25, December.

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